With this in mind, investors can run a screening process to land their portfolios on the right side of the market, a screener that looks for high returns on capital (for future compounding benefits) and strong business models that can sustain economic cycles better than others. Finding this criterion, all investors need is a reasonable discount, whether in terms of price action or valuation multiples, to deliver the sort of upside everyone is looking for.
Fitting this filtering process, names like Ulta Beauty Inc. (NASDAQ: ULTA), Adobe Inc. (NASDAQ: ADBE), and even Sprouts Farmers Market Inc. (NASDAQ: SFM) return the best profile. Not only are these names positioned in a low-cyclical space within their industry, which is reflected in their high profit metrics, but they also trade at valuations that create an asymmetric upside opportunity for investors today.
